Cap. 631 Art. 30Termination or re- negotiation of contracts.      Cap. 452.

(1) The officials of the debtor shall, in consultation with the insolvency practitioner, review any executory contracts that have been entered into by and between the debtor and any counterparty, and the performance of which has not been concluded, and shall evaluate the termination or re-negotiation of any such executory contracts as shall be conducive to the economic viability of the debtor:

Provided that, where the debtor is a natural person, only executory contracts entered into for the furtherance of the debtor’s trade, business, craft or profession may be considered for the purposes of this article:

Provided further that the re-negotiation and termination of contracts of employment shall, notwithstanding anything contained in this Act, continue to be regulated by the rules set out within the

Employment and Industrial Relations Act or other pertinent legislation.

(2) Where it is identified that the re-negotiation or termination of an executory contract would benefit the debtor’s prospects of economic viability, the insolvency practitioner may invite the counterparty or counterparties to engage in bona fide negotiations with the debtor, for the purpose of reaching a mutual agreement as to the re-negotiation or termination of the executory contract.

(3) If the parties are unable to come to a mutual agreement as to the re-negotiation or termination of the respective executory contract, the debtor may propose to unilaterally terminate the executory contract as part of the restructuring plan submitted for confirmation in terms of Part VI.

(4) The unilateral termination of an executory contract shall render the debtor liable only to compensate the counterparty for losses incurred, if any, as a result of the unilateral termination, or as may otherwise be determined in accordance with regulations to be made by the Minister, and a claim for such losses may be immediately included within the restructuring plan:

Provided that the insolvency practitioner shall notify any consequential revisions to the ranking of claims or the formation of classes to the officials of the debtor and to the affected parties, in writing and without undue delay.

(5) Upon the confirmation of the restructuring plan, any unilateral termination of any executory contract as contemplated therein, shall, except where a longer period is stipulated within the restructuring plan, take effect automatically upon the earlier of:

(a) the lapse of three (3) months from the date of the confirmation of the restructuring plan, notwithstanding any appeal that may be filed against the confirmation of the restructuring plan; or

(b) where the executory contract provides for a notice period shorter than three (3) months, the said shorter period.

(6) The provisions of this article shall not allow a debtor to propose the unilateral termination of an executory contract where the termination would result in the non-enforcement of any close-out netting provision or any other provision in any contract providing for or relating to the set-off or netting of sums due from each party to the other in respect of mutual credits, mutual debts or other mutual dealings.